Forums: Discussions for entrepreneurs and small business.

Say you owe 50k in credit, 40k on cars, and 125k in tax. You`re willing to do away with the cars and have other transportation, but the value vs. the balance makes it difficult to sell one and impossible to sell the other for at least the payoff. With 2 full time jobs that you hate, you still come up short each month by 300 and that`s with reduced payments on the credit and Uncle Sam giving you a break too by allowing a 500/mo payment. It`s bad enough that you work 80hrs per week and don`t get to enjoy any of the money for yourself, but at minimum payments on credit debt, it could take 7yrs to payoff debt and 10yrs isn`t out of the question considering what could go wrong. How long could you keep this kind of schedule going anyway before you crack and is it worth it? You have to take care of home and Uncle Sam...no options there, but should you bankrupt the rest?  Like I said it`s going to take you 10 years to pay it off anyway and that`s if you keep the two full time jobs and get all the other breaks to go your way. If you go bankrupt, it will show for 10 years on your credit, but during that time you can begin to rebuild it with any extra money you get, but at least you aren`t stuck in a mandatory work to make payments you can`t afford situation. Credit,debt,finance folks...talk to me.

Like  Stan said, you need to talk to a professional and make sure to look at all your options.
For the IRS debt you should consider and Offer in Compromist, and know that, if you do end up going bankrupt,  under some very rigid circumstances you can discharge IRS debt in bankruptcy.  Timing is incredibally important.  I did have some clients that, if they had waited just 2 months,  could have had all their back taxes, penalties, and interest discharged in bankruptcy.

I`ll add my opinion to get ahold of a financial pro. But from a personal point of view, it comes down to how important is your credit rating to you? I`ll argue that a credit rating can be repaired, some time in the future, but the wear and tear on your soul over the next decade likely won`t be so easily repaired.

I will add my opinion as well, First get a financial pro to help you out.
Second, If you knew you didn`t have the money? Why spend what you don`t have? Credit Cards are what I call "Giving my money away Card" I`ve learned that if I can`t afford it, I simply don`t buy it. I keep a credit Card around to make some business payments, but again I make sure I have the money available or that I can at least pay the bill without sacrificing my family, I have 2 children, that want everything and if you ask me, I`d rather spend the 6.9% interest rate [the money] on my children than making Credit Card Companies Rich.
As for the cars, well get rid of them there is always public transportation.
Honestly, you set yourself up to your financial situation. My advice is to pay it off and suffer, since bankruptcy laws are very strict and no matter if you bankrupt, you will still be liable for the debt. I think they defer the payments or cut the interest..
Have you ever considered debt consolidation? I have someone that does that...



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Edgar Monroy
Web Developer / Owner / Consultant
When starting your own business the need to "know-how" is greater than money!
http://www.nuevolution.net

I thought I would respond to a post on these forums, since I just posted. It looks like you are talking about personal bankruptcy, not business bankruptcy? I will share a few stories which will help for each situation. First, my own story. I owed $25k in credit card debt and got over my head and could not make the minimum payments. I had just moved to CA and it was more expensive. Plus my car died so I had to buy a new one, on credit since I did not have savings. Basically all my accounts defaulted. And I also did not pay taxes for 7 years. I thought about bankruptcy, but decided it would not help. This was after my credit was destroyed. Basically I have learned to live on cash only and learned all about the business world, no longer being a major "consumer" living on credit like everyone else. I am just now settling my taxes with JK Harris for $5000. They do all the paperwork, stop the IRS from coming after you (if they are calling or harassing). They are now making an offer in compromise, so I am waiting to see how much that will be, but it will be significantly less than the $15-20k I owe. I am glad of the lessons I have learned, and the opportunity to make money as a business owner, and not buying a bunch of junk I don`t need. Story 2: My friend was $80,000 in debt but had $150,000 in available credit. He started writing credit card checks into his brokerage account and started trading stocks and made $100k that year and paid off all his debts. Personally, if I were you, I would find a way to restructure your debts and lower your monthly payments without ruining your credit. Credit counseling services will tarnish your credit. Take the available credit you have and try to increase it. Then use this extra credit to make money or grow your business. This is what large corporations do. They just keep moving, manage their debt, and increase their credit. Your taxes you can pay significantly less thru JK Harris or another firm ( I recommend them because they have been pleasant to deal with, reputable, and nationwide). Trust me, you don`t want to go thru the pain I have gone thru, and all the unforeseen pains you will encounter thru bankruptcy. There is a lesson in your situation somewhere- try to discover what it is.